Casualty Reciprocal Exchange v. Wooley, 45142
| Decision Date | 13 January 1969 |
| Docket Number | No. 45142,45142 |
| Citation | 217 So.2d 632 |
| Parties | Subscribers at CASUALTY RECIPROCAL EXCHANGE, an Unincorporated Association of Persons By and Through its Attorney-in-Fact, Bruce Dodson, a Reciprocal Insurance Exchange v. Lonnie T. WOOLEY, Robert McBroom, Jr., Barney Todd McBroom, Melvin Nobile and Merchants Bank and Trust Company. |
| Court | Mississippi Supreme Court |
Davidson & Beach, Jackson, for appellant.
Ellis & Ellis, Prewitt, Bullard, Braddock & Vance, Vicksburg, for appellee.
Casualty Reciprocal Exchange (hereinafter Insurance Company) filed a bill of complaint in the Chancery Court of Warren County against Lonnie T. Wooley (hereinafter Insured) and Robert McBroom, Jr., Barney Todd McBroom, Melvin Nobile and Merchants Bank & Trust Company (hereinafter Third Parties) seeking cancellation of an automobile liability policy. At the conclusion of Insurance Company's case the Court sustained a motion of the defendants to exclude the evidence and dismiss the bill of complaint. Insurance Company appealed.
In determining whether the trial court erred in sustaining the motion to exclude and dismiss, we must assume as true all facts which Insurance Company's evidence fairly tends to establish, together with all reasonable inferences to be deduced therefrom. Laseter v. Sistrunk, 251 Miss. 92, 168 So.2d 652 (1964). The facts are stated in the light most favorable to Insurance Company, consistent with the foregoing rule.
Insured purchased an automobile and was told by the bank that financed it not to drive the car until it was insured. Insured went to the Jabour Insurance Agency in Vicksburg on February 2, 1967, and furnished the Jabour Agency with the description of the automobile and signed an application for insurance. Part 6 of the application as filled out by an employee of the Jabour Agency upon information furnished by Insured is as follows:
YES NO
1. Has any driver been involved in any accidents within
the last three years? X
2. Has license of any driver ever been revoked or
suspended? X
3. Has any company cancelled or refused to renew
insurance for applicant or any driver? X
4. Has any driver ever insured through any assigned
risk plan? X
5. Has any driver been charged with any moving traffic
violation? X
6. Is any driver physically impaired? X
7. Is any driver required to file evidence of coverage
under any financial responsibility law? X
8. Does any driver frequently operate a non-owned
automobile? X
9. Has approved driver training court been completed
by male drivers under 25? (No answer)
10. Is car used in business other than to or from work? X
11. Is car driven to work? X
12. What is annual mileage?____________________
13. Are passengers other than members of Household
carried? (No answer)
After the application was filled out and signed by Insured the Jabour Agency determined that the Insured should be issued the policy in accordance with the underwriting rules of Insurance Company. Thereupon, in reliance upon the truthfulness of the answers given by Insured to the questions contained in Part 6 of the application Jabour Agency issued on behalf of Insurance Company a 'Family Combination Automobile Policy' insuring Insured against public liability, medical payments, collision, and other coverage. The total premium of $176.50 was paid and the policy was delivered to Insured. A copy of the policy was later examined by an underwriter at the home office, and based upon the answers to the questions in Part 6 of the application, it was determined that the Insured met the underwriting requirements of Insurance Company.
The first five questions of Part 6 of the application were false. Jabour Agency would not have written and delivered the policy if truthful answers had been given to the first five questions of Part 6 of the application because to do so would have violated the underwriting rules of Insurance Company.
Upon receipt of the daily report of the issuance of the policy, the home office ordered a routine commercial investigation. Upon receipt of the report of the commercial investigation the home office underwriter decided to invoke the cancellation provisions of the policy which require ten days notice to the Insured in event Insurance Company cancels the policy. The commercial investigation report was not admitted in evidence but the underwriter testified that the policy was cancelled because the report indicated that the Insurance Company did not want to write that piece of business, but that Insurance Company did not have enough information to attempt an immediate cancellation. On February 27, 1967, Insurance Company mailed to Insured notice of cancellation stating the policy would be cancelled at noon on March 11, 1967. Insured received this notice on March 10, 1967, the delay being caused by his absence from home. On March 10, 1967, Insured was involved in an accident while driving the automobile described in the policy. This accident gave rise to claims against Insured by Third Parties. In the cancellation notice Insured was notified that the premium would be repaid prorated to the date of cancellation. Jabour Agency refunded $158.60 to Insured by check dated March 18, 1967. The balance of the premium was paid into the registry of the court upon the filing of this suit.
When the Insured reported the accident to Jabour Agency a form was filled in by Insured reporting to the Safety Responsibility Bureau of the existence of the policy advising that agency that the policy was in force. Insurance Company did not disclaim coverage to the Safety Responsibility Bureau. After some investigation by Insurance Company it entered into a non-waiver agreement whereby it was agreed between Insured and Insurance Company that Insurance Company could investigate the accident of March 10, 1967, without either party waiving any rights whatever. After further investigation Insurance Company denied that there was any coverage at the time of the accident on March 10, 1967, and filed this suit to cancel the policy ab initio because of the fraudulent answers in the application.
The first question for our decision is whether the false statements in the application entitled Insurance Company to rescind this policy absent waiver or estoppel. The statements in the application were false; the answers were supplied by Insured; and they were material to the risk. Insurance Company had a right to rely on these facts. They were made for the purpose of inducing Insurance Company to enter into the insurance contract which it would not have done if true answers had been given. Absent waiver or estoppel, Insurance Company is entitled to have the policy cancelled ab initio. State Farm Mutual Automobile Ins. Co. v. Anderson, 107 Ga.App. 348, 130 S.E.2d 144 (1963); Temperance Ins. Exchange v. Coburn, 85 Idaho 468, 379 P.2d 653 (1963); Metropolitan Life Ins. Co. v. Becraft, 213 Ind. 378, 12 N.E.2d 952, 115 A.L.R. 93 (1938); Minich v. M.F.A. Mutual Ins. Co., 325 S.W.2d 56 (Mo.Ct.App.1959); Gooch v. Motors Ins Co., 312 S.W.2d 605 (Mo.Ct.App.1958); 12 Appleman, Insurance Law & Practice § 7291 (1943).
The next question is whether Insurance Company waived its right to rescind the policy or is estopped to do so. Insured and Third Parties contend that Insurance Company waived its right to avoid the policy because (1) on February 27, 1967, Insurance Company had obtained knowledge from the commercial investigation that Insured was not a desirable risk and did not void the policy, but elected to cancel according to the policy provisions and thus continued it in force until March 11, 1967, and did not at the time of cancellation refund the entire premium, but retained the part that would be earned up to March 11, 1967; and that Insured relied upon the cancellation notice which stated that the effective date of cancellation was March 11, 1967; and (2) the filing by Insured of a statement with the Safety Responsibility Bureau showing insurance coverage of Insured by the Policy in question was known by Insurance Company and prevented Insured's drivers' license from being revoked, and Insurance Company never disclaimed coverage to the Safety Responsibility Bureau.
Insured and Third Parties also contend that because the application was not made a part of the policy and the policy stated that it embodied all the agreements between the parties, the Insurance Company may not rely on the false statements in the application.
We consider the question of waiver and estoppel together. Estoppel arises only when the person claiming the benefit of estoppel has been mislead to his detriment. We are of the opinion that there are no facts upon which an estoppel could arise in this case.
An insurer may waive...
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